Southern California -- this just in

Duarte calls for declaring fiscal emergency, seeks new taxes

July 30, 2012 | 1:35
pm

Citing the loss of redevelopment as a crippling blow to the city's finances, officials in Duarte will consider declaring a fiscal emergency to allow the council to place a sales tax increase before voters.

The proposed tax increase, which would be placed on the ballot during the Nov. 6 statewide election, could range from 0.25% to 0.5%, raising a projected $953,319 to $1.9 million in extra revenue annually.

The move came after neighboring El Monte place a tax on sugared drinks on the November ballot to stave off its financial woes.

Duarte officials said the city has no plans to file for bankruptcy as the cities of Stockton, Mammoth Lakes and San Bernardino have done or voted to do in recent weeks.

"The City is not in a bankruptcy situation and we don't want to get there either," Mayor John Fasana said in a statement.

City officials said the dissolution of redevelopment agencies on Feb. 1 means that the city's general fund will forgo about $1 million a year in reimbursements from the redevelopment agency and will have to find other ways to fund programs like graffiti removal that were paid for by the agency.

The state has also told the city that its general fund can't collect on $9.5 million that the city says the redevelopment agency borrowed from the city's general fund over the years.

The city has cut programs and staff positions in recent years, shaving about $700,000 off its budget at the beginning of the last fiscal year, but "as a result of the State’s elimination of redevelopment agencies, the progress the City had made in cutting expenditures to balance the City’s budget had been wiped out overnight,” City Manager Darrell George wrote in a staff report.

The resolution the council will vote on Tuesday night takes a shot at the state, noting that, "in contrast to the City which has prudently managed its financial resources, the State, particularly over the last approximately four years, has been unable to balance its own budget without raiding local government funds and relying on overly optimistic revenue projections.”

Duarte's position is less dire than cities like San Bernardino and Compton, which have accumulated multimillion-dollar deficits and have no reserves. Duarte has a structural deficit, but has not spent through its reserve fund.

Still, city officials said that without the sales tax revenues, they might have to cut funding for services like gang prevention programs, after-school programs and street repairs.

Because no council seats are up for election in November, the council must unanimously pass the resolution declaring a fiscal emergency, and then must vote by a two-thirds majority to place the proposed tax increase measure on the ballot.